The right technology to realize Inclusive Finance.

    The right technology for Poverty eradication and Inclusive finance.       

Author: P. Abraham Paul.     E-mail  Tweet  @PA_Paul

Introduction:  Universal money management using phone, a path breaking state of the art idea to enable all sorts of day to day money transactions through phones is a generic  non-banking service that will accelerate ‘Financial Inclusion’ and an effective tool for eradication of poverty and supporting Micro Finance needs for all especially  people in lower socio-economic strata across the country.

How Universal money management using phone can become a life science that can support and comfort the humanity in many ways including realizing Inclusive Finance.

Money through Mobile (MTM) for Universal money management using phone.

MTM is an acronym in short for Universal Money management using Phone, hereunder explain the idea, features, products, services, the technology involved, the business aspects and advantages it can provide to society as a whole and the importance of the need to propagate it and also regulate it from the beginning.

1. Money through Mobile (MTM) is different from Mobile Banking.

At the outset it is to be clearly understood that Money through Mobile (MTM) system as proposed herein is not to be confused with mobility in Banking service or service of       e-banking using Mobile phones as being currently provided by banks as ‘Mobile Banking’.

1.1. ‘Money through Mobile’ (MTM) system is envisaged to work transparently to regular Banking systems and banking industry meaning that all transactions in MTM service involving services of Banks, Post Offices and other financial institutions will be in the same operational and functional level, using same technology, features, products and services at par with what are available to universal MTM users.

1.2. Money through Mobile (MTM) will not disrupt Banking Industry.  

There is this big myth that Un-banked Pay-by-Phone service will be disruptive to Banking industry whereas factually it is other way around. From the foregoing it can be seen that  Money through Mobile (MTM) as envisaged herein will only supplement and enhance current banking system.

2. Universal nature of Money through Mobile (MTM) 

Universal nature of MTM that enable do all sorts of un-banked Money management using Phone.makes it a simple, convenient and user friendly system by itself with all required supporting mechanism in place to handle its clients needs autonomously without human intervention at the operation level. Therefore, the proposed set up of money management using phones can be construed as an exclusive MTM Bank with supporting mechanisms readily built into it. 

2.1. Money through Mobile (MTM) as a Pay-by-Phone mechanism. 


As can be seen in the schematic representation above, Money through Mobile (MTM) is envisaged partly as a ‘Pay-by-Phone’ service that provide easy payment mechanism to directly transact (receive, store and send) virtually all forms day-to-day micro/macro         e-payments.

MTM service can enable payments of Utility service bills, Taxes, Duties, Service charges, School and College fees, Payments to job contractors and job workers by their employers, Bill payments in Shops, Sales outlets & Malls, Cinema halls, Petrol bunks, various forms of Ticketing with Vendors and at payments at Vending machines, Payment of Taxi and auto fares, Vehicle parking charge, Road and Bridge toll payments, etc, etc.

 2.2. Money through Mobile (MTM) as a service for quick transfer of money.


MTM system can provide facility for quick transfer of money directly between mobile phone accounts of any MTM users.  Immediate Money transfer can be done any time from anywhere to Relatives, Friends, Children, to all types of Vendors, Suppliers etc.

2.3. Direct Benefit Transfer (DBT) is the game changer.

Direct Benefit Transfer (DBT) is the ideal way for realizing poverty eradication and Inclusive Finance.


3. DBT can replace PDS.

MTM can help to remove PDS progressively in phases.

Current Public distribution system is inefficient, riddled with logistic problems, pilfer prone and inadequate and wasteful. PDS suffer from severe management problems in every step; procurement, transport, storage and distribution of materials under PDS scheme, huge number of bogus and ghost ration cards and corrupt practices by various agents in the chain.   

In addition, a major portion of the food items meant to be distributed to 67% percent of population as envisaged in the FSB dumped into PDS end up in the hands of profiteers. This will adversely affect the open market economy making price of such food items fall in the open market on one side;  drastic reduction in farmer’s incentives disabling and discouraging  them from continuing agriculture as livelihood on the other side; reduction in agricultural production pushing up Government’s acquisition cost on food items will go up as most of it will have to be imported to keep PDS live and kicking.

3.1. PDS with its all attendant problems can be done away  with Direct Benefit Transfer to the needy and only to the needy.


3.2. How MTM can help to implement programs under Food Security Bill.

The much debated about Food Security Bill has been steamrolled through Loksabha, in spite of many aspersions about the bill especially about its financial burden on the Government in Federal and States.

There are also animated arguments about Planning Commissions view point of defining people below poverty line with BPL index fixed at Rs.33.3 and Rs.27/- per day per person respectively in Urban and Rural areas. On the face, it appears to be much lower than what a person would need to survive. Explanation of Mr. Montek Sing that this is just an indicative metrics to start with to identify people in acute poverty for whom free food and many other freebies covered under various Government welfare programs to be given, does not seem to have understood even by leaders in ruling party, not withstanding the fact the BPL index is based on 2004-05 price index and that need to be enhanced linking with inflation.

It is strange that no one from the Government cared to provide convincing explanation of this to the members in both houses of Parliament before taking up the bill. It is equally strange that Opposition while casting aspersion of financial burden of FSB on one side, most of them wanted FSB to give universal coverage, multiplying the expenditure many times.

Fact is that with right method of identification. it will come to pass that about less than 25% of the population only would need free food supplies and this figure also will go down as general Standard of living improves over time.

3.3. Relevance of BPL Index as decided by planning commission.

Please see the chart below made by me on this subject showing relevance of BPL Index Vs Standard of living Vs Resource mobilization based on the assumption that with nominal 5% GDP growth, it shall be possible to fully eradicate poverty in a span of 20 years.  The chart is hypothetical but self explanatory.

Poverty Eradication_Chart

3.4. Give subsidies only to those who need it.

Cruz of the matter is that all subsidies should be given only to those who are really in need of it, and all subsidies for those who can afford without it (indicated as shown in ‘No subsidy zone’) shall be removed. To ensure this, a method for identification of people below poverty line and those in acute poverty in the base of the population pyramid is needed. Hope this will be realized with Aadhaar at the earliest.

3.5. Public Distribution system is the prerogative of the State.    

Public Distribution system is the prerogative of the State and so be it. It is impossible for Federal Government to run PDS across the country and it has been proven so, time and gain. Parliament can make rules accordingly and leave it to the States to do what they choose according to their resources.

State shall be free to decide what and how much to give and what percentage of population is to be covered.  Responsibility of identifying the beneficiaries and classifying them to decide whom all given what benefits and also the mode of distribution operation of PDS, shall also rest with States. State can chose the physical distribution through the networks of ration shops or giving cash in lieu of it using DBT or both also shall be the decision of State.

Financial implication of PDS / DBT shall also be borne by States and other than what are supplemented from federal exchequer. With this Food Corporation of India shall be changed to Food corporations of States.

3.6. Impact of Public Distribution system on Farmers and Market economy.

One of the major drawback of Government run Food acquisition and distribution to large percentage of country’s population is its impacts on market economy and its effects on Farmer’s incentives and growth Agriculture. If the food items are dumped free or at very low cost to a major portion of the population as envisaged in the FSB, a good portion of it will move into black market through profiteers and middlemen disrupting open market economy at the distribution areas on one side;  will have adverse effect in Farmers in not getting right price for their products as they will have to depend solely on Government to take off their produces at floor price, on the other side. This will dampen agriculture growth and in the process government will be forced to import Food grains at very high cost to sustain PDS live and kicking.

Contrary to this, replacement of PDS with DBT by giving money to the beneficiary for buying their needs from open market, market decides the price price and farmers get its benefits. Thus DBT will help the end users, the farmers and help to bring huge saving to governments in the expenditures on FSB.

4. MTM for Micro Finance support .



Direct benefit transfer using technology based systems and services is the right way.

Please see a detailed article on Universal un-banked or exclusively banked Money management using Phone.

As explained in the article, it is possible to use the advance technology to do Direct Benefit Transfer through Mobile Phones.  With Aadhaar and DBT in place it shall be possible to implement programs covered under Food Security and replace PDS progressively.

 Technology for DBT is readily available and can be implemented in urban and semi urban areas and rural areas where Mobile phone service available and in remote areas through Panchayat offices or with service of franchisees of special purpose banking systems using  satellite link access as explained in the article.

Public Distribution System is riddled with umpteen problems in itself over and above the perennial tussles between Federal and State governments on this. Naturally, everyone is critical about the implementation of provisions of Food Security Bill with problem riddled PDS.  The way out is ‘Direct Benefit Transfer’ if implemented in the right way.



About Abraham Paul

Vision & Objective: Telecom has always been the passion of my life. After 60 years of outstanding career and many personal contributions to the industry, I still have same urge, and desire to give back to the industry, the abundant experience, knowledge and potential acquired, by providing consultancy service to forward looking enterprises and entrepreneurs in Legacy and New generation Telecom & IT in the areas of Business Management, Technology, Engineering and Services. Apolitical and religiously unbiased.
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